April 29, 2013

The Morality of Free Markets – a debate

April 29, 2013

The Morality of Free Markets – a debate

I recently posted on Facebook what I though was an interesting commentary on markets by Rupert Murdoch. Murdoch’s case is that not only are capitalist free markets more efficient but that they are more moral.

I did not really add a lot to what Murdoch said but received several follow-ups from two Facebook friends. One was from Tom Abate. Tom is Editor of The San Leandro Patch. I connected with Tom years ago when he was a writer for the San Francisco Chronicle. I believe that what Tom is doing – online local news – is very important. There are many sources for world and national news and newspapers do not cover local news well enough.

The other post came from FB friend Jim Bridgeman. Jim is a Fellow of the Society of Actuaries with a Master’s degree in Math and is an Associate Professor of Math at the University of Connecticut. He and I attended Note Dame at the same time. Jim, another math grad student, and I shared an apartment in Berkeley, CA in 1969. They were attending classes at U.C. Berkeley and I was designing safety systems for nuclear weapons at Lawrence Livermore Laboratory.

Murdoch’s piece was in The N.Y. Post on Sunday, April 21. Murdoch owns the N.Y Post and also the WSJ along with dozens of newspapers in the U.K and Australia along with a lot of TV and film assets with “Fox” as part of their name.

You should read his words. It’s a short piece, with tidbits like this:

“But while we’ve [capitalist free markets] won the efficiency argument, we have yet to persuade people that the market does better because it is more moral — or that socialism fails because it is largely immoral in its denial of fundamental freedoms.

To the contrary, too many people think that the market succeeds because it is based on a vice — greed. And that socialism is better, because it is based on a virtue — sharing.

… the market doesn’t succeed because of greed. For the truth is just the opposite. The market succeeds because it gives people incentives to put their own wants and needs aside to address the wants and needs of others. To succeed, you have to produce something that other people are willing to pay for.”

Murdoch trashes crony capitalism and Wall Street bailouts. He asks:

“What’s just about a generation of people who rack up government debt for their own health care and retirement — while leaving their children and grandchildren to foot the bill?”

He adds:

“Our challenge is to bring our message to such people — whether they work on a factory floor, behind a restaurant counter or at a desk — in a way that lets them understand why they stand to benefit more from a society that rewards their work and initiative than one that pretends to spread the wealth around.”

Tom Abate disagreed with Murdoch. This is his post:

“I think capitalism is, at best, amoral. Yes, capitalism can reward effort. Millions of private enterprises flourish due to the energy and passion of their owners. They provide products and services, livelihoods and purpose. But the age of robotics is dawning. Capital will soon have little use for labor except as consumers. The challenge will be redistributing wealth without institutionalizing sloth.”

Jim responded to Tom’s post with:

“Tom, you couldn’t be more wrong. Capitalism is about giving people what they really want, i.e. want enough to pay for it (the acid test). No business on earth can survive for a month without giving its customers something they are willing to pay for. (Maybe you don’t think their customers should want it, but the customers think so.) Capitalism rewards people and organizations who give other people and organizations what they really want. Sadly for the intelligentsia, what people really want can often be pretty ugly so the rentier intelligentsia rejects the process of giving to them as immoral. Robotics will only change things in the direction of more people having to earn their livings making other people feel good in direct ways (entertainment, leisure, games, health care, arts (including culinary), spiritual enrichment, grooming, self-expression, design of the things robots make, etc.) rather than directly making things that people want, since robots will be making more of the things. It will probably be a kinder, gentler world if that’s what you want, since more people will be serving their fellows in direct hands-on ways. The invention of mass production generated exactly the same feelings you express. What will all the farmers and craftsmen do? They moved to the suburbs and loved it. Couldn’t wait to get off the farm or out of the back-yard shop.”

I made this response:

“Jim has made an excellent case and I will only add that Murdoch’s real point is that Capitalism is more moral that any other system. This morality is based on the fact that, in Murdoch’s words, “The market succeeds because it gives people incentives to put their own wants and needs aside to address the wants and needs of others. To succeed, you have to produce something that other people are willing to pay for. They are willing to pay for it because they want it. Their wants are not to be judged. Their wants are an expression of their liberty. Capitalism is adaptive. Capitalism created robotics and will adapt to robotics. Nothing else will.”

Two of the biggest failure nations on the face of the earth are North Korea and Venezuela. N. Korea is one of the remaining experiments with Communism and Venezuela is a nation whose economy has been ravaged by Socialism. Absent a free market, the infrastructure to produce oil in Venezuela had been wrecked. The citizens of both of these nations are significantly worse off for lack of capitalism and free markets.
The Case For The Market’s Morality – by Rupert Murdoch